President Trump Posts ‘Big Win’, Xi Aligns
Tuesday, Chinese President Xi Jinping promised to open the country’s economy further and lower import tariffs on products including cars, in a speech seen deescalating trade dispute with the United States.
Xi said that China will sharply widen market access for foreign investors, a chief complaint of the country’s trading partners and a point of contention for US President Donald Trump’s administration, which has threatened billions of dollars in tariffs on Chinese goods.
“President Xi’s speech appears to have struck a relatively positive tone and opens the door to potential negotiations with the in our view. The focus now shifts to the possible US response.”
“But of course actions speak louder than words. We will keep an eye on the progress of those opening-up measures.”
The speech at the BOAO Forum for Asia in the southern province of Hainan had been widely anticipated as one of Xi’s 1st major addresses in a year in which the ruling Communist Party marks the 40th Anniversary of its landmark economic reforms and opening up under former leader Deng Xiaoping.
Xi said China would raise the foreign ownership limit in the automobile, shipbuilding and aircraft sectors “as soon as possible”, and push previously announced measures to open the financial sector.
“This year, we will considerably reduce auto import tariffs, and at the same time reduce import tariffs on some other products,” Xi said.
He also said “Cold War mentality” and arrogance had become obsolete and would be repudiated. His speech did not specifically mention the United States or its trade policies, which have been assailed by Chinese state media in recent days.
Vice Premier Liu He had already vowed at the World Economic Forum in January that China would roll out fresh market opening moves this year, and that it would lower auto import tariffs in an “orderly way”.
Chinese officials have been promising since at least Y 2013 to ease restrictions on foreign joint ventures in the auto industry, which would allow foreign firms to take a majority stake. They currently are limited to a 50% stake in joint ventures and cannot establish their own wholly owned factories.
Foreign business groups welcomed Xi’s commitment to reforms, including promises to strengthen legal deterrence on intellectual property violators, but said the speech fell short on specifics.
“Ultimately US industry will be looking for implementation of long-stalled economic reforms, but actions to date have greatly undermined the optimism of the U.S. business community,” said vice president of China operations at the US-China Business Council.
In talking with investors in Asia early Tuesday, they all told me that the market was cheered by Xi’s speech because it was framed in positive terms which should ease any trade tensions, some voiced cautious optimism about the promised reforms.
He said that China is opening sectors where they already have a distinct advantage over the sector, such as its banking industry, which is dominated by domestic players.
Remember, President Trump said in a Tweet Monday calling the US’ relationship with China not free trade but “stupid trade.” That is because China need us more than we need them.